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Romania - Investor Treaty Arbitration 2020

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Investment arbitration involving Romania has encompassed a number of specific industries, such as duty-free shops, newspaper distribution, energy, mining and oil & gas. Numerous disputes arose out of investments made during the privatisation period in the 1990s. Over the last 12 months, Romania has seen a significant increase in investment arbitration claims, mainly in the renewables energy sector under the Energy Charter Treaty. This development was a predictable and direct consequence of the cuts and changes made by the Romanian government regarding the support scheme for renewable energy. Similar legislative changes have taken place recently in Ukraine and Mexico, and in the past in Spain, Italy and the Czech Republic, which has led to some 100 investment arbitrations against these states worth billions.
Bucharest, Romania skyline

What are some of the common causes of investor-treaty disputes in Romania? What role are bilateral and multilateral investment treaties playing?

In 2019, net foreign investment (FDI) in Romania totalled $3.5bn. A cheap and skilled labour force, low taxes, a liberal labour code and a favourable geographical location are Romania's main advantages for foreign investors. investors mainly come from the Netherlands, Germany, Austria, Italy and Cyprus. The main sectors for investment are manufacturing, construction and real estate, trade, financial intermediation and insurance. However, corruption is perceived to be a problem, including the government's reported inability to make good use of European Union (EU) financial support, leading some investors to complain of political instability and legislative unpredictability, and concern about a lack of judicial independence.

This article was originally published in Financial Worldwide Magazine.

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